Stock takes: Key holders

Fletcher Building will be hoping this week's official cash rate cut in Australia will help boost the country's building industry. Photo / APN

It seems that small shareholders will not have much say when it comes to Haier getting control of Fisher & Paykel Appliances.

Grant Samuel's independent report shows outside of Haier, which already owns 20 per cent, and Australian investment manager Allan Gray with a 17.46 per cent stake it has already agreed to sell to Haier - five investors hold a further 27 per cent between them.

That's more than 64 per cent combined - more than enough to get Haier over the 50 per cent threshold required to meet its minimum acceptance level.

Grant Samuel seems convinced it won't be too hard.

Its report says there is a reasonable expectation that Haier will get to 50 per cent if a group of hedge funds which own about 10 per cent elect to sell their shares.

Stock Takes can only imagine how galling it will be for small investors to hear that a bunch of hedge funds - who have probably jumped on the bandwagon to make a quick buck - will end up holding the reins of power.

Haier has already said it would be happy to get to 50 per cent control of Fisher & Paykel Appliances.

If this seems likely to happen, why would it bother making a higher offer?

NO RIVALS

The report also makes it clear there are unlikely to be any other rival bidders gearing up to make an offer and buy a blocking stake to stop the full takeover from going ahead.

Grant Samuel says it is debatable that a blocking stake would affect Fisher & Paykel's relationship with Haier and a rival takeover bid would have to secure the consent of Haier to sell up - which would seem unlikely given Haier wants to buy Fisher & Paykel itself.

If Haier gets to 50 per cent it can to a large extent carry out its plans anyway and it won't matter if someone else owns 10 per cent, the report says.

One downside of Haier getting over 50 per cent but not succeeding in a full takeover bid would be a reduction in liquidity - the number of shares able to be traded - which could see the company fall out of the NZX 50 index.

If that were to happen some of the institutional investors may be forced to sell out, the Grant Samuel report warns. Shares in Fisher & Paykel closed up 4.5c at $1.25 yesterday.

BUILDING UP

Fletcher Building has been on a roll lately.

The company's share price has shot up 27 per cent in the last two months.

At the end of July the shares had fallen to $5.77 but now they are trading over $7.30.

One analyst said new chief executive Mark Adamson had been doing the rounds talking up his plans for the company and many liked what they were hearing.

But there are concerns that the share price might be getting a little ahead of reality.

Fletcher Building will also be hoping this week's official cash rate cut in Australia will help boost the country's building industry.

But it could take some time before there is any flow through to the bottom line.

Shares in Fletcher Building closed down 9c yesterday at $7.25.

WHAT COMPETITION?

Trade Me shrugged off competition from new supposed rival Wheedle without a blink this week with its shares rising to their highest point since the company listed in December last year.

Wheedle - backed by Mainfreight co-founder Neil Graham - went live on Monday morning but hit glitches on the first day and was forced to shut up shop on Tuesday to undertake an audit of its systems after a number of holes in its security systems were pointed out online.

There was never much concern about it posing a real threat to Trade Me as any newcomer to the market would have to overcome the key plank of selling anything online - that sellers want to be where the most number of buyers are looking to buy.

Trade Me shares hit $4.09 on Wednesday, above its previous high of $4.07 at the end of May.

Shares in the online auction site closed unchanged yesterday at $4.09.

MILKING IT

Fonterra has taken a number of key market players up to Malaysia in the past week, sparking a bit of concern that the company is buttering up the industry ahead of the launch of its Fonterra Shareholders Fund.

While the dairy co-operative has a reasonably sized plant in Malaysia it's not perceived as a key part of the business, leaving some questioning why it decided to take some potential investors up there.

Then again it could also be a touch of the green-eyed monster rearing its head a bit. Only time will tell if those who went on the trip also turn out to be investors.

The fund isn't expected to list on the NZX until November or December.

LATE REPORTS

Two sharemarket minnows have until today to file their annual reports or they face being suspended from the market.

Allied Farmers, which bought the assets of Hanover Finance, and Insured Group, which back-door listed through Lombard Finance, were both due to file their annual reports by September 30. The NZX stopped trading in the two companies as of Monday.

Allied has blamed its delay on the "resolution of an outstanding matter" which it needs to sort out in order to finalise its June 30 financial statements.

Allied expects its matter to be resolved in days.

Insured Group puts its delay down to finalising a loan with St George Bank and isn't expecting to put its report out until the end of this month.

Stock Takes can't help thinking that few investors would miss these companies if they weren't able to trade them on the exchange.

Allied closed yesterday at 2.9c, while Insured Group shares were worth 1.5c each.

ON THE RISE

But one company that does appear to be turning around its fortunes is Dorchester Pacific.

The insurance and finance company had languished at less than 10c a share until July when it picked up and has now more than doubled in value.

Geoff Ross' Business Bakery, which picked up a stake in the company for a song a few years back, has restructured the business, paid back debt and this week announced plans for an $18.5 million acquisition of credit manager and debt collection firm EC Credit Control.

Dorchester has committed to buying the business through a combination of 60 per cent cash and 40 per cent shares, with $10.5 million worth paid up front and a further $8 million based on an earn-out arrangement over two years. Shareholders will get the chance to vote on the deal at a meeting to be held this month.

Shares in Dorchester closed steady yesterday at 20c.

BEERS ALL ROUND

Stock Takes hears plans to float beer brand Moa are going full steam ahead with a prospectus expected to be registered by the end of next week.

The $15 million initial public offering has sparked interest among the investment community although it is being perceived by some as being at the riskier end of the investment spectrum.

A few free beers may also be helping to entice brokers out of their offices.

Existing owners The Business Bakery, Pioneer Capital and the Scott family are understood to be committing a combined $1.5 million to buy into the offer with a further half-a-million-dollar commitment each from The Business Bakery and Pioneer if the share price falls below its initial listing price.

Tamsyn Parker is the NZ Herald's Money Editor. A business journalist for ten years, she has worked in the UK and NZ for the New Zealand Herald, the National Business Review and a specialist publication on investment products for financial advisors. She is passionate about helping readers learn more about to make their money work for them.